EXPLANATORY STATEMENT
FAMILY LAW (SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION INTERESTS) AMENDMENT APPROVAL 2008 (No.1)
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument the Attorney-General, under regulation 38 of the Family Law (Superannuation) Regulations 2001, amends the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the 2003 Approval).
The 2003 Approval contains methods for valuing superannuation interests held by parties to a marriage for the purpose of the provisions of the Family Law Act 1975 enabling superannuation to be split in property settlements on marriage breakdown.
Methods were approved in 2004 for valuing superannuation interests held by parties to a marriage in the Commonwealth Superannuation Scheme and, in 2004 and 2005, in the Public Sector Superannuation Scheme.
The amendments made by the Attorney-General in this instrument reflect changes made:
- by Schedule 3 to the Superannuation Legislation Amendment Act 2007 to the Superannuation Act 1976 (relating to the Commonwealth Superannuation Scheme), and
- by the Twenty-ninth and Thirtieth Amending Deeds, made on 28 August 2007 and 19 December 2007 respectively, to the Trust Deed to establish the Public Sector Superannuation Scheme
enabling members of Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme to obtain early release of benefits.
Under these changes, members of each scheme may obtain early release of lump sums from their funded account balances, on compassionate or severe financial hardship grounds, to the extent allowed under the Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry (Supervision) Regulations 1994.
The instrument adjusts the methods that have been approved for valuing superannuation interests held by:
- public servants and former public servants with preserved benefits in each scheme
- former public servants in the Commonwealth Superannuation Scheme who have qualified for, but not yet taken up, their entitlement to a retirement pension, and
- persons in the Commonwealth Superannuation Scheme who were public servants at the time when the organisation in which they worked was sold or whose functions were outsourced
to provide that, where a lump sum has been released early in respect of an interest, the amount of the lump sum released, and interest to the date of valuation, is deducted from the value of the interest.
The instrument incorporates by reference the Superannuation Act 1976, which makes provision in relation to the Commonwealth Superannuation Scheme. The Act can be viewed at the following website:
http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/current/bytitle/B3B93C3E0F24A6E6CA25736F0019CFEE?OpenDocument&mostrecent=1
A copy of the Act may be purchased from CanPrint Communicatons Pty Ltd, PO Box 7456, Canberra MC ACT 2610 (telephone:1300 656 863).
Consultation on the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Australian Government Actuary, the Department of Finance and Deregulation and Commonwealth Superannuation Administration (ComSuper) by way of exchange of correspondence, discussions and a meeting (involving the Australian Government Actuary’s office, the Department of Finance and Deregulation and the Attorney-General’s Department).
Overview
The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2008 (No.1) was enacted to address the need to update the methods for valuing superannuation interests in the context of property settlements under the Family Law Act 1975. This instrument was issued by the Attorney-General under the authority of regulation 38 of the Family Law (Superannuation) Regulations 2001, reflecting amendments made to the Superannuation Act 1976 and the Public Sector Superannuation Scheme. The policy objective is to ensure that the valuation methods accurately reflect changes in the schemes that allow for early release of lump sums, such as for compassionate or severe financial hardship. This adjustment is crucial for maintaining fairness and accuracy in the valuation of superannuation interests during family law property settlements.
Scope and Application
The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2008 (No.1) amends the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 to incorporate changes made to the valuation of superannuation interests held by individuals in the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. This amendment applies to the valuation of superannuation interests in the context of property settlements under the Family Law Act 1975, specifically for public servants, former public servants, and persons in the Commonwealth Superannuation Scheme who were public servants at the time of a sale or outsourcing of their employing organisation. The instrument adjusts the approved methods to account for early release of lump sums under the Superannuation Act 1976 and related regulations, ensuring that the value of the superannuation interest is reduced by the amount of any early released lump sum, including interest to the date of valuation. This legislation operates at the Commonwealth level and is subject to subordinate instruments that may further extend or restrict its application.
Key Provisions
The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2008 (No.1) amends the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (section 1(2)). This amendment instrument addresses the valuation of superannuation interests held by parties to a marriage under the Family Law Act 1975, particularly in cases where these interests are to be split as part of a property settlement on the breakdown of a marriage. The changes were made to align with legislative updates to the Superannuation Act 1976 and modifications to the Trust Deed establishing the Public Sector Superannuation Scheme, which now permit early release of benefits under specific conditions (section 1(1)).
The amended methods for valuing superannuation interests now account for instances where a lump sum has been released early. This is pertinent for public servants and former public servants with preserved benefits in the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. Additionally, it applies to former public servants in the Commonwealth Superannuation Scheme who have qualified for but not yet taken up their entitlement to a retirement pension, and to persons in the Commonwealth Superannuation Scheme who were public servants at the time their organisation was sold or whose functions were outsourced. Specifically, where a lump sum has been released early, the amount of the lump sum released, along with interest to the date of valuation, is deducted from the value of the interest (section 1(3)-(4)).
Parties or entities governed by this Act must ensure that when valuing superannuation interests for property settlement purposes, they incorporate the adjustments specified by the amendment. This involves correctly accounting for any early lump sum releases in accordance with the amended methods, which is crucial for accurate valuation and equitable distribution of superannuation benefits. The obligation to adhere to these valuation methods is imposed on those involved in the administration of property settlements under the Family Law Act 1975 (section 1(2)).
Failure to comply with the amended methods for valuing superannuation interests could lead to incorrect assessments, potentially resulting in legal disputes or financial discrepancies in property settlements. While the explanatory statement does not explicitly outline specific offences, penalties, or consequences for non-compliance, such deviations could be subject to judicial review or correction under the Family Law Act 1975 or other relevant legislation. The precise penalties for non-compliance would depend on the nature and extent of the breach, but they could potentially include financial penalties or corrective orders to ensure accurate valuations are used in property settlements.